HomeMy WebLinkAbout2014-07-816222
174903
ORDINANCE NO. 2014-07-8162
AN ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY, APPROVING
A LEASE AGREEMENT AMONG THE CITY OF PADUCAH, MCCRACKEN
COUNTY, AND GENOVA PRODUCTIONS, INC., WITH RESPECT TO A
PUBLIC PROJECT; AUTHORIZING THE EXECUTION OF THE LEASE
AGREEMENT AND OTHER DOCUMENTS RELATED THERETO
WHEREAS, the City of Paducah, Kentucky (the "City") has previously determined, and
hereby further determines, that it is a public purpose to reduce unemployment in the City, to
increase the City's tax base, to foster economic development within the City and to promote the
development of a skilled workforce, all to the benefit of the citizens and residents of the City;
and
WHEREAS, the City and McCracken County (the "County") jointly own an industrial
building located at 5400 Commerce Drive within the boundaries of Paducah, McCracken
County, Kentucky, (the "Project Site") which building was constructed by the City and the
County for the public purpose of economic development; and
WHEREAS, the City and the County have determined that it is in the best interest of
citizens of the City of Paducah and McCracken County that the City and the County lease the
aforesaid building and the Project Site (collectively, the "Premises") to Genova Productions, Inc.,
a Michigan corporation ("Genova") for the purposes of locating, equipping, operating and
managing a manufacturing and distribution facility of vinyl building products, and the hiring and
maintaining an estimated 125 new full-time employees at the Premises, which will promote the
public purpose of the City and the County; and
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE
CITY OF PADUCAH, KENTUCKY, AS FOLLOWS:
Section 1. Recitals and Authorization. The City hereby approves the Lease Agreement
among the City, the County, and Genova (the "Lease") in substantially the form attached hereto
as Exhibit A and made a part hereof. It is further determined that it is necessary and desirable
and in the best interest of the City to enter into the Lease for the purposes therein specified, and
the execution and delivery of the Lease is hereby authorized and approved. The Mayor of the
City is hereby authorized to execute the Lease, together with such other agreements, instruments
or certifications which may be necessary to accomplish the transaction contemplated by the
Lease with such changes in the Lease not inconsistent with this Ordinance and not substantially
adverse to the City as may be approved by the official executing the same on behalf of the City
or the City Manager. The approval of such changes, and that such are not substantially adverse
to the City, shall be conclusively evidenced by the execution of the Lease by the authorized
official.
Section 2. Severability. If any section, paragraph or provision of this Ordinance shall be
held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such
section, paragraph or provision shall not affect any of the remaining provisions of this
Ordinance.
Section 3. Compliance With Open Meetings Laws. The City Commission hereby finds
and determines that all formal actions relative to the adoption of this Ordinance were taken in an
open meeting of this City Commission, and that all deliberations of this City Commission and of
its committees, if any, which resulted in formal action, were in meetings open to the public, in
full compliance with applicable legal requirements.
Section 4. Conflicts. All ordinances, resolutions, orders or parts thereof in conflict with
the provisions of this Ordinance are, to the extent of such conflict, hereby repealed and the
provisions of this Ordinance shall prevail and be given effect.
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Section 5. Effective Date. This Ordinance shall be read on two separate days and will
become effective upon summary publication pursuant to KRS Chapter 424.
jdMWxzM City Clerk
Introduced by the Board of Commissioners, June 30, 2014
Adopted by the Board of Commissioners, July 1, 2014, 2014
Recorded by City Clerk, July 1, 2014
Published by The Paducah Sun, July 9, 2014, 2014
EXHIBIT A
LEASE AGREEMENT
See attachment
175249
w
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ASSIGNMENT AND REAFFIRMATIONAGREEMENT
This is an ASSIGNMENT AND REAFFIRAMATION AGREEMENT (this
"Agreement") made and entered into this day of July, 2014 (the "Effective Date") among
G.P.E.D.C., INC., d/b/a the Greater Paducah Economic Development Council, Inc., a Kentucky
not -for -profit -corporation ("GPEDC'), with a principal mailing address of Post Office Box 1155,
Paducah, Kentucky 42002-1155; Paducah Economic Development Foundation, Inc., a
Kentucky not -for -profit -corporation ("PED"), with a principal mailing address of Post Office
Box 1155, Paducah, Kentucky 42002-1155; MCCRACKEN COUNTY, KENTUCKY
("County"), with a principal mailing address of 300 South 7th Street, Paducah, Kentucky 42003;
and CITY OF PADUCAH, KENTUCKY ("City"), with a principal mailing address of Post
Office Box 2267, Paducah, Kentucky 42002-2267; (County and City shall collectively be
referred to as the "Lessor") (GPEDC, PED, City, and County may collectively be referred to as
the "Parties" and singularly be referred to as a "Parry");
WITNESSETH:
WHEREAS, capitalized terms used and not otherwise defined in this Agreement shall
have the respective meanings ascribed thereto as set forth in the lease agreement dated as of June
30, 2014, by and between the Lessor and Genova Products, Inc., a Michigan corporation
("Genova"); and
WHEREAS, the Lessor has a compelling public interest in fostering economic
development and promoting the development of a skilled workforce, all to the benefit of the
citizens and residents of the city of Paducah and the county of McCracken, Kentucky; and
WHEREAS, the Lessor owns the Building and has determined that it is in the best
interest of citizens of the City of Paducah and McCracken County that Lessor rent the Building
and the Project Site (collectively, the "Premises") to Genova for the purposes of locating,
equipping, operating and managing a manufacturing and distribution facility of vinyl building
products, and the hiring and maintaining an estimated 125 new full-time employees at the
Premises (the "Project"), all as more particularly set forth in that certain Memorandum of
Understanding among GPEDC and Genova relating to the Project, executed by the respective
parties thereto with an effective date of June 29, 2014 (a copy of which is attached hereto and made
a part hereof as Exhibit A) (the "MOU"); and
WHEREAS, the Lessor has determined that the Project will promote the public purpose of
the Lessor; and
WHEREAS, on June 30, 2014, the Lessor and Genova entered into a lease of the
Premises subject to such terms and conditions as set forth in the lease agreement and the MOU
(the "Lease") and
WHEREAS, the Lease was entered into by the Lessor in reliance upon certain obligations
and liabilities of GPEDC to Lessor as set forth in the MOU; and
WHEREAS, GPEDC desires to acknowledge and affirm these certain obligations and
liabilities to the Lessor and to subsequently assign these certain obligations and liabilities to
PED; and PED is agreeable to accepting this assignment from GPEDC and PED is further
agreeable to affirming and reaffirming these certain obligations and liabilities to the Lessor; and
Now, THEREFORE, City, County, GPEDC and PED agree to the following:
A. Affirmation of GPEDC and Assignment to PED.
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1. Pursuant to this Agreement, GPEDC hereby agrees, acknowledges,
affirms and reaffirms its obligations and liabilities to the Lessor under Sections A.2. and A.4. of
the MOU (the "Obligations").
2. For valuable consideration, the receipt of which is acknowledged by the
parties, GPEDC hereby assigns and transfers unto PED the Obligations.
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B. Assumption of Oblisations and Liabilities. In consideration of the
aforementioned, PED hereby agrees to assume and faithfully perform the Obligations to the
Lessor from and after the Effective Date of this Agreement. It is understood and agreed that
PED shall be fully bound to the Lessor for the performance of the Obligations in accordance with
the terms and conditions of the MOU.
C. Miscellaneous Provisions. This Agreement shall be fully binding upon the
parties hereto and their successors and assigns. This Agreement shall be enforceable,
exclusively, in the McCracken Circuit Court and the governing law shall be the Commonwealth
of Kentucky. Time shall be of the essence with respect to the performance of the Obligations.
D. Effective Date. The effective date of this Agreement shall be July 1, 2014.
IN WITNESS WHEREOF, the parties hereto have set their hands.
GPEDC:
G.P.E.D.C., Inc.
By:
Title:
Date:
27
PED:
Paducah Economic Development Foundation, Inc.
By:_
Title:
Date:
LESSOR:
CITY OF PADUCAH, KENTUCKY
By:
Title:
Date:
MCCRACKEN COUNTY, KENTUCKY
By:_
Title:
Date:
EXHIBIT A
THE MOU
174366d1ean
lime 9, 20i4,1:30pm
MEMORANDUM OF UNDERSTANDING ,
This is a MEMORANDUM OF UNDERSTANDING CMOU'5 between GENOVA
PRODUCTS, INC., ("Company" or "Genova!% with a principal mailing address of Post Office
Box 309, Davison, Michigan 48423, and G.P.E.D.C„ INC., d/b/a the .Greater Paduchh Econoinic
Development Council, Inc., a Kentucky not -for -profit -corporation ("GPEDC', with a principal
mailing address of Post Office Box 1155, Paducah, Kentucky .420024155. Company and
GPEDC may be referred to herein individually as a 'Party", and collectively as the 'Parties
Recitals:
W)MREAS, the City of Paducah, Kentucky ("City'), and Cbtmty of McCracken
("County') hold fee simple title to a certain industrial building and related nnproveinents (the
'Building') situated upon a certain tract of real property at 5400 Com eive-Drive in Paducah,
McCracken County, Kentucky (the "Property'), for industrial development;
W.MRXA4,S, Company proposes to locate, equip, and operate -a manufacturing and
distribution facility of -vinyl building products (tire 'Project') within the Building and on the
Property;
WHEREAS, the Project would have a positive vmpact on the entire coinmunity by
stimulating the local economy, expanding the tax base, and reducing unemployment within the
boundaries of Paducah, McCracken County, Kentucky;
WHE1iEAS, GPEDC leadership strongly support the location of the Project in
Paducah, McCracken County,Kentucky;
WHEREAS, in order to induce the location, equipping, and operAQ4 of the Project
by Company on the Property , GPEDC or its assigns has agreed to provide certain
econolmia incentives to Comphuy as provided in this MOU for purposes of defraying the costs
of locating and equipping the Project on the Property;
WHEREAS # Company is very interested in pursuing the Project and the Parties wish
to enter into ibis MOU to clearly set forth the framework of a 'subsequent agreement, regarding
the location Ansi equipping of the Project and the economic incentives to be provided to partially
defray the costs thereof; and
WHEREAS , the Parties intend to work cooperatively to move forward with the
Project as set forth in this MOU.
Now, T149REFORE, Company and GPEDC agree to the following
A. Ca1gp1ifinents from. Paducah.
1. GPEDC or its assigns agrees to extend a revolving loan to Company for the sole
purpose of putchasing trade fixtures, equipment, and fixtures for the Project that enhances its
5 EkUM 3706419_1
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operations on the Property and creates additional and new job opportunities to Kentucky
residents up to the aggregate amount of $1.1 million, which loan shall be repaid with
interest at the rate of 4.5% per annum amortized over a ten (10) year period. Advances up
to and not to exceed $900,000.00 from the revolving loan shall be expressly conditioned
upon Company having hired and retained a minimum of 18 new full-time employees
("FTEs"i at the Premises/Project. Site and upon providing current financial statements.
Additional advances from the revolving loan after the aforesaid initial advance of the first
$900,000.00 are expressly conditioned upon Company having hired and retained a
minimum of 50 new FTEs and upon providing current financial statements, FTEs are
defined as new full-time employed workers with an average hourly compensation of
$13:11 per hour, plus health insurance benefits with a minimum of 50% Lessee
contribution, which employed workers are subject to the City of Paducah's license fees as
defined under Article IV of the Paducah Codeof Ordinance, Sections 106-183 and 106-184,
and who satisfy the Kentucky residency criteria under the provisions of the Kentucky
EcoAornlc Development Finance Authority ("KEDFA') Direct Loan Programs. S.aid.loan to be
evidenced by a Revolving Loan Credit Agreement and secured by a security agreement
wherein GPEDC or Its assigns are accorded a first and superior security interest in the trade
fixtures, equipment, and fixtures acquired for and used in the operation of the Project.
Such documents are to contain such terms and conditions as are acceptable to GPEDC or
its assigns.
2. GPEDC agrees to pay directly to City and County (a) the base rental payments
commencing with the Lease Commencement Date (July 1, 2014) (defined below) and
terminating on the Base Rent Commencement Date (September 1, 2015) (defined
below), and .(b) the equipment Ioan installment payments during the first year of the loan,
3. Additional Incentives: GPEDC will in good faith petition the State of
Kentucky and other partners for the following:
(i) A ODPA 1% payroll rebate for 10 years;
(ii) KBI tax credit (offsets state corporate income taxes by 50% of
lease payments per year for 10 years:);
(iii) KEIA (sales & use tax refund for building/constrnction materials &
income tax abatement); and
(iv) Kenfucky Training incentives
4. At its sole cost, GPEDC agrees to complete a Phase I environmental assessment
of the Property prior to lune -30; 2014, and if .indicated; a Phase If envvostmrital assessment,
and agrees to indemnify Company from any envitonmental damages that were caused prior to
the Lease Conulnencement Date (defined below).
5. As an incentive and an inducement to Company to locate, equip and"opprate,
Detroit 3705419 I
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the Project on the Property, GPEDC agrees not to offer cash incentives to attract the
companies expressly listed below within the boundaries of McCracken County, Kentucky for
a five (5) year period from the Effective Date of this MOU, provided, however, such
covenant shall not apply in the event; (i) any of the listed companies agree to pay an
average salary of $20/hour or more; (ii) a building owned by GPEDC, City, or County
loses a tenant (such as Whitehall or Macco); or (iii) Company is in default of any of its
obligations under this MOU, the lease, or the loan documents. The fisted companies
GPEDC is restricted from providing cash incentives are as follows: Charlotte, Nibco,
Lasco, Mueller, Tigre, Spears, ,Amerimax,.P Building Products, Trex, Timbertech,
Azek, Fiberon, Gossen, Kleer Decking, Tarnko, and Universal Forest Products. This
does not prohibit the City, County, or State from granting statutory incentives as
permissible by law.
B. Commitmenis of Company. In consideration of the public incentives to be
provided, .Company agrees as follows:
1. Company reasonably projects and in good faith anticipates Hiring and
maintaining 125 new FTEs at the Property within ten (10) years of the Effective Date of
this MOU with Health insurance benefits. Further; Company shall provide to GPEDC, at
its sole cost aiid expense, the following:
(i) Written reports of the Company's progress in satisfying the foresaid
employment commitments. Such progress reports shaft be provided bi-
annually
iannually commencing upon commencement of the lease agreement and
shall be certified as. accurate by Company. Upon a reasonable request by
City and/or County, Company shall provide support documentation
verifying the aforesaid progress reports.
(ii) A year-end financial statement and balance sheet, in reasonable detail and
with all supporting schedules and comments, duly certified by Company's
certified public accountant by April 30th following each fiscal year-end of
the Company.
2. To obtain and maintain all licensing, permitting and certification
requirements for the lawful construction, installation, and equipping of the Project
and the operation of the Project including bqt not limited to, all city development,
zoning, building code ordinances and policies, and all other federal, statean8 local
applicable laws and regulatiofis (collectively, "Governmental Permits'). GPEDC
will work closely with the Company to ensure these Governmental Permits are
provided in a timely and expedited manner.
3. To acknowledge that the financial and other assistance it would receive,
as described herein would be made possible, in part, by reason of local businesses,
governmental entities, and citizens contributing to support the economic development
efforts of GPEDC. Company agrees to be a good corporate citizen and become a
DeuoIl 37066!119 1
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GPEDC investor at it level of $7;500/year, the first annual contribution to be paid upon
the execution of the definitive lease agreement for the Building and the Property.
C. Additionij Commitments of the Parties.
1. GPEDC, as agent for City and County, and Company agree to negotiate in
good faith the terms of a lease agreement for the Building and the Property on or before
June 30, 2014. Failure to enter into the lease agreement within this time frame shall result
in the termination of this MOU and neither Party shall have any further liabilities or
obligations to the other hereunder. Company shall lease the Building and the Property for an
initial term of ten (10) years with an option to renew for one (1) additional term of ten (10)
years. The lease shall commence on July 1, 2014 (the "Lease Commencement Date"), with base
rentals payments being paid by GPEDC from the Lease Commencement Date and terminating
on the Base Rent Commencement Date (September 1, 2015). Company shall commence base
rental payments on September 1, 2015 (the "Base Rent Commencement Date"). The base rental
rate shall be $289,000 per year, Base rentals shall be paid in advance in equal monthly
installments commencing on the Lease Commencement Date: Also commencing on the Lease
Commencement Date and continuing during the term of the lease, Company shall timely pay, at
its sole cost and expense, as additional rentals. any and all other customary costs arising out of
the use and occupancy of the Building and the Property, including without limitation
maintenance, repair, insurance, utilities, and taxes. Any failure by GPEDC to pay the base
rental payments described above shall not constitute a default by Company under the lease.
D. Conditions.. to. Closing. The Patties acknowledge that Genova's execution of this
MOU is contingent upon the approval by the Commonwealth of Kentucky approving the
KEDFA incentives described above. The Parties acknowledge and.agree that any obligations
of the Parties to consummate the transactions contemplated under the terms of this MOU
are expressly conditioned upon of the following:
1. Execution of it binding definitive lease agreement of the Building and the
Property among City, County, and Company on or before June 30, 2014;
2. Execution and delivery by Company of all loan documents required in this MOU
for the Revolving Loan Credit Agreement on or before June 30,2014;
3. Approval of the KEDFA incentives described above by the State of Kentucky; and
4. Approval by the governing legislative bodies of GPEDC, City, and County of
the terms of this MOU and the consummation of the transaction's contemplated under
this MOU.
In the event .the condition is not satisfied or waived by the Patties Hereto on or
before June 30, 2014, this MOU shall terminate and thereafter neither Party shall have any
further liabilities or obligations to the other hereunder.
Dettoit 37116419 1
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E Expeantes_Except as otheiwise provided herein and the definitive documentation
to be entered among the Parties, City and County, each Party shall be responsible for its
own attorneys' fees and other costs and expenses, anticipated or otherwise.
F. Assignability. GPEDC may assign any or all of its rights and obligations
hereunder to the City of Paducah, McCracken County; and/or the Paducah McCracken
County Industrial Development Authority.
G. Governing Law: CgUnjergarts. Miscellaneous. This MOU shall be governed by
and construed in accordance with the laws of the'State of Kentucky, without regard to any
conflict of laws principles. Venue shall be in the McCracken Circuit Court. This Agreement
may be executed in counterparts (including counterparts executed and transmitted via fax or
e-mail), each of which shall be deemed an original but all of which together shall constitute
one and the same instrument. This MOU shalt continue in force and effect for the same term
as the lease agreement for the use and occupancy of the Property to be entered pursuant to
this MOU. Ifatry provision of thi$ MQU shall be held invalid under any applicable laws,
such invalidity shall not affect any other provision of this MOU than can be given affect
without the invalid provision, and, to this end, the provisions hereof are severable.
H. Effective Date. This MOU shall not become effective and binding until fully
approved, executed, and delivered by all Parties hereto and City and County.
6440it 3706439 1
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IN WITNESS WHEREOF, the parties hereto have set their hands.
GENOVA PRODUCTS, INC.
Delrojt 3706419 I
GY.E.D.C., INC.
By:
Title;
Date:
Nroft-3106419J
34
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HAVE SEEN AND AGREED TO:
CITY OF PADUCAH, KENTUCKY MCCRACKEN COUNTY, KENTUCKY
By: By:
Title:
Date:
Title:
Date:
6oroii 3706419_3